Harrison's Reports (1933)

HARRISON’S REPORTS December 16, 1933 200 available lor him after its exhibition by the first-run exhibitor, shortening the second-run exhibitor’s protection accordingly in case he should fail so to exhibit the picture; (c) regulates the exhibition of subsequent runs with a view to benefiting other exhibitors who have the same picture booked ; (d) it exempts from the provisions of the contract all pictures that shall have been shown for a full show week prior to the run granted to the first-run exhibitor. Seventeenth Clause ; In case a given number of pictures are not to be “generally released” within the life of the contract, such pictures are excepted and excluded, but this clause makes it obligatory on the part of the distributor to notify the exhibitor to that effect at least fifteen days before the expiration of the contract; if the exhibitor, however, should send to the distributor a letter within thirty days after the expiration of the fifteen-day period that he intends to exhibit these “not generally released” pictures, the distributor must deliver them to the exhibitor if he should produce them within one year after the expiration of the contract. (This clause makes it difficult for the distributor to produce a good picture at about the end of a picture season and hold it back to sell it to the same or to another exhibitor at higher prices in the subsequent season, such as has been the case with “Golddiggers,” “Dancing Lady,” “The Invisible Man” and “Counsellor at Law.”) Part 2: Under paragraph (a) of this Part of the Code, the arbitration provision in the Optional Standard License Agreement, which is made part of the Code, shall govern if both parties to the contract shall agree to arbitration. The arbitration clause provides for two arbitrators to be selected by the distributor, and two by the exhibitor ; these four are to select a fifth, none of whom shall have either a direct or an indirect interest in the controversy. Paragraph (b) of this Part of the Code enables the contending parties to reduce the number of the arbitrators to one each, who shall select a third arbitrator from outside the ranks of the industry. Part 3; It prohibits distributor and exhibitor from seeking to induce the other to break any picture contract. Part 4 : It prohibits distributor and exhibitor from offering bribes for undeserved advantages against another distributor or another e.xhibitor, as the case may be. Part 5 : It prohibits the disclosure of receipts by either distributor or exhibitor, except to persons entitled to such information. Part 6: It grants the exhibitor whose average film rental for each picture is $250 or less the right to cancel ten per cent of the pictures he has contracted for (provided he is in good standing with such distributor as regards to his contracts), such right to be exercised as follows : ( I ) He can cancel the tenth picture after playing the first nine pictures. If the picture he desires to cancel should be released early, he can pay for it when it becomes available for him and then apply the payment on the rental of the tenth picture ; but he must notify the distributor to that effect not later than fourteen days after the general release date in the territory where the exchange is located. He can take the same action with each additional group of ten pictures or fraction of a group. If he should wish to cancel two or even more pictures from the first group of ten, if the group should be large enough, he can pay for them, and then apply the rental of each cancelled and paid for picture on the last picture of each group of ten pictures. Since the Code specifies that more than five pictures and up to ten shall be considered a full unit, entitling the exhibitor to cancel one, the number of pictures an exhibitor may cancel in a group is as follows ; In a group of pictures anywhere from six to fifteen, he may cancel only one picture. In a group of anywhere from sixteen to twenty-five, he may cancel two pictures. In a group of anywhere from twenty-six to thirty-five, he may cancel three pictures. The same ratio may be used for larger groups. In the case of, say, Paramount, which company sells a maximum number of sixty-five, a contract-holder is entitled to cancel six pictures. He is entitled to cancel the same number if Paramount should deliver only fifty-six pictures. When a picture is excluded, all contractual rights to it revert to the distributor. When the picture to be excluded belongs in the percentage class, in determining the rental an exhibitor must pay to the distributor, the same calculation shall be made as is made in the case of pictures an exhibitor refuses to play — by taking into consideration percentage pictures played in the exhibitor’s theatre for a certain number of days or months previously. Since the cancellation provision in the Optional Standard License Agreement conflicts with the cancellation provision of the Code, the Code provision governs. ARTICLE VI Part i — Clearance and Zoning Boards The purpose for which the Clearance and Zoning Boards are created is to make unreasonable clearances in length of time and in size of area impossible. Section 2 of this Part provides that the Clearance and Zoning Boards shall be appointed by the Code Authority, that there will be one such board in each exchange centre, that each such board shall consist of one distributor with theatre affiliations, one distributor without theatre affiliations, one first-run exhibitor with producer-distributor affiliations, one first-run exhibitor without producer-distributor affiliations (in case there is none, such exhibitor may be taken from the ranks of the first-run neighborhood), two subsequent-run unaffiliated exhibitors, and one disinterested person, who will be appointed by the Code Authority after approval by the Code Administrator, and who shall be regarded as the impartial observer for the Code Authority. This member shall vote only when the board is deadlocked. A chairman shall be elected by the members from among themselves by a majority vote. All vacancies shall be filled from the class to which the vacant seat belonged. Section 3 provides that these boards shall be created before January i, 1934, that each board, immediately after its creation, and thereafter just before January i of each year, shall formulate in its territory clearance schedules to govern for the year, the purpose of which schedules will be to prevent unfairness in clearances, both of area and time. These schedules may classify theatres in accordance with local conditions. Such schedules may be changed at the request of interested parties and after a hearing by the Board as long as the changes will not affect any exhibition contracts made with the existing schedules as a basis unless both parties to the contract agree to the proposed changes. Under Section 4 a board, in making the classification of the theatres, or in formulating clearance schedules, must take into consideration that : (a) clearance determines the rental value of pictures considerably ; (b) the showing of a picture within the same competitive locality too soon after the preceding run by restricting unduly the competitive area in which clearance is limited depreciates a picture’s rental value ; (c) unfair depreciation of the rental values of pictures discourages the production of quality pictures and consequently affects adversely the investment of capital and tends to reduce employment ; (d) unreasonable clearance affects considerably the value of pictures for subsequent-run exhibitors (e) causing a reduction to the box-office receipts not only of the theatres but also (f) of the distributors. Section 5 stipulates that the decisions of each local board shall be made by majority vote, in writing. Section 6 provides that the schedules formulated by each board shall be filed with the Code .Authority immediately. Section 7 (a) stipulates that those who feel that the schedule formulated by such a board is unfair to them shall file a complaint with the board not later than thirty days after the schedule had been published ; that the board must make a decision within fifteen days after the receipt of such complaint or within three days after hearing the aggrieved parties. All aggrieved persons may appeal to the Code Authority within five days of the board’s decision if they are not satisfied \vith such a decision, in which case they have the right to appear (b) before the Code -Authority to present additional evidence, and the Code -Authority must render its decision within fifteen days from the day the hearing upon the appeal had been held. Section 8 (a) makes binding upon both exhibitors and distributors the schedules of the Local Clearance and Zoning boards, or the decisions of the Code -Authority upon them, in the exchange centre affected, and permits the terms of the contracts between disputants to be carried out (bl pending a final determination of a dispute by either the Board or the Code .Authority. (To be continued next week)